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In Discrimination Case, Legal Wrangling Continues

By David Streitfeld July 10, 2012 6:32 pmJuly 10, 2012 6:32 pm

Kleiner Perkins got a last-minute reprieve Tuesday when a San Francisco judge agreed to hold another hearing on the venture firm’s claims that its junior partner Ellen Pao, who has filed a discrimination suit against the firm, should be required to submit to arbitration. Kleiner wants to make the discrimination case go away, and arbitration would be a fine vehicle for that.

Somewhat surprisingly, Kleiner does not make its partners sign employment agreements compelling arbitration. Perhaps it never conceived of a high-profile case being filed against it by one of its partners asserting a pattern of harassment and retaliation, which is what it is facing now. Kleiner denies Ms. Pao’s assertions.

Ms. Pao did have arbitration agreements with two Kleiner funds, but Judge Harold Kahn did not buy the firm’s arguments that they were binding in this case. That produced a tentative ruling on Monday that went against Kleiner.

On Tuesday, however, Judge Kahn said he would be willing to hear in greater depth new arguments related to the fund agreements. A new hearing is set for July 20.

Whoever loses in that hearing will likely appeal, delaying the case considerably. But if Ms. Pao’s tentative victory this week is confirmed, she will be in an excellent position to seek a major settlement from Kleiner. Her lawyer, Alan Exelrod, though, has said his client wants the full airing that only a trial can provide.